Medicaid Planning
Meetings in Washington DC With Congressmen
This has been a busy week, traveling to Washington DC to meet with congressmen and staffers on Medicaid and LTC issues.
Many were not aware of the Partnership between Medicaid and LTC insurance which came about as part of the Deficit Reduction Act of 2005. Partnership is an incentive from the government to encourage people of modest means to purchase at least some LTC insurance.
The time will come when the purchasers of partnership policies may need LTC services. After the LTC insurance has paid for care, if more cash flow is needed, or the policy is exhausted, it may be necessary to apply for Medicaid. Instead of being required to spend-down to Medicaid impoverishment, Medicaid will ignore assets equal to what the partnership LTC insurance policy has already paid out. If citizens take some personal responsibility for their LTC, then the government will reward them if more care is needed.
Unfortunately, many states do not promote this program, to their financial loss. Texas has a wonderful website of http://www.OwnYourFutureTexas.org and the state of Connecticut sends state employees out to public venues to host seminars on the Partnership concept. I am told that Connecticut can document 10% of the attendees purchasing some partnership LTC insurance and an additional number decide that Medicaid planning is not in their best interest.
While in Washington I pointed out that many requests legislators receive involve a concession of some type to possibly receive a tax benefit later. This program requires the government to give away nothing now, to reap the benefit of citizens paying at least some of their own LTC costs in the future. It is good for everyone. I asked for legislators to consider promotion of this concept to save protect Medicaid from future budget shortfalls.
After making these points with Congressman Paul Ryan Wednesday, I saw in the Green Bay, WI newspaper on Friday an article about him where he mentions taking the first steps toward fixing a serious problem: a debt-ridden federal government facing an onslaught of retiring baby boomers draining entitlement programs.
The timing of this article, of just what I spoke to him about, was probably a coincidence. However, congressmen need input from people in the various fields that affect government programs to know the best way to improve them.
Now that you know what the partnership program is, and how it can protect assets in the event you have exhausted or need more cash flow than your partnership LTC insurance policy provides, wy would you wait to investigate it? Policies are becoming less generous as the insurance companies are finding more and more people collecting on them. Medical underwriting is becoming much more stringent – do NOT wait until you can no longer qualify to purchase this coverage. Call TheLongTermCareGuy.com, Romeo Raabe, at (920) 884-3030 or (800) 219-9203 to investigate. Most people do not need as much LTC insurance as they might initially suspect.
HealthCare.Gov (ACA) and Long Term Care
No, long term care is not directly affected by the Affordable Care Act (ACA, AKA Obamacare) but there are some scary correlations between the two. I refer to this morning’s Wall Street Journal article about what is coming – in both healthcare and long term care.
Doctors are retiring in droves. Those near are taking early retirement to avoid the losses of treating people for less than they are reimbursed. Medicare payments are being cut way back just as 10,000 Americans a day are coming on board (and will each day for the next 18-19 years). The ACA takes large sums from Medicare to fund the ACA. Doctors are reimbursed less and less, as more people are starting to use Medicare, hoping to get Dr. appointments scheduled. Doctors often discourage their children from entering the profession. Others won’t accept new patients over the age of 50 (who will get Medicare in 15 years).
Medicaid, the primary payer of long term care in America, is being stretched to millions of uninsured Americans for medical care now. This leaves less for the already under-reimbursed long term care facilities. Nursing facilities tell me they lose between $2000 and $3400 per month on every resident on Medicaid. They cannot make you leave if you run out of funds and turn to Medicaid, but they can – and do – say no to your entrance. If you lose money on every customer, you cannot make it up on volume! They do it gently, asking about what care you will need, and then apologizing that they do not have the staff, currently, to deal with those needs. If the “desirable” LTC facilities turn you away, what choice does this leave you? The less desirable facilities, or one far away that will accept you? I wonder if the people who “wisely” divested their homes and fortunes years ago realized the box they have put themselves in.
More doctors are going into “concierge” medicine, accepting only those patients willing to pay an annual retainer of $500-$3000 a year for ready access and longer consultations. Some LTC facilities also are turning away all Medicaid entrants. The ambience will be nicer, with more staff and better activities and food, and all will pay their fair share with no cost shifting. That is where I want to go when needed, and I have the income from my LTC insurance policy to pay for it. Wouldn’t you like to be in a position to choose such care as well?
With the ACA starting enrollments just as the Medicare Advantage season starts, there is confusion with some going to the wrong site for information and to sign up. Many Americans already believe that LTC is free from the government, and do not realize that Medicaid is not given because you are old, or disabled, it is given because you are impoverished – a fancy word for broke. Why would someone plan to end up that way and dependent on a government that you may have heard rumors of being short on funds itself? LTC insurance is often less expensive than people imagine, and most do not need as much as they initially suspect. Wouldn’t it be prudent to at least investigate? Call Romeo Raabe, TheLongTermCareGuy.com at (902) 884-3030 or (800) 219-9203 to get started.
New Study Details Financial Costs of Caregiving
Numerous studies have underscored the physical and psychological strain of taking care
of an aging, ailing loved one. However, a recent study by Genworth quantifies
the monetary loss that caregiving entails without the benefit of Long Term Care insurance. The new report, titled “Beyond Dollars: A Way Forward” calculated that, on average, families would be able to save nearly $11,000 yearly in out-of-pocket expenses if long term care arrangements were made prior to the loved one actually needing long term care. Moreover, 53% of family members that acted as the primary caregiver have lost income due to their caregiving duties.
The days of Ozzie and Harriet, where the stay at home moms ran the house in a dress and heels ended long ago. They had the time, energy, and space to take care of family members when they could no longer live on their own. Today’s families rarely have the time or space to be full-time caregivers. Many try, but the demands of family, jobs, and living often mean compromises and less than optimal results.
This new study emphasizes the cost in dollars that falls on family members who try to do the best they can at caregiving or assisting in caregiving. Long drives, restaurant meals, hotel stays, etc. all add up while limiting one’s time available for gardening, coupon cutting, or other cost saving strategies many would like to employ. Unforseen costs such as paying for yard care while visiting a family member do add up.
So why is it that so few adult children consider paying for long term care insurance for parents? If parents have property, businesses, or other assets that might be used up paying for care, instead of being available for inheritance, it would seem to be prudent for the children, if able, to consider such insurance to be able to keep family assets in the family.
Another strategy is for parents to use an illiquid asset to pay for such insurance to prevent liquidation to pay for care. If a line of credit is arranged for on the home through a reverse mortgage, that line of credit will increase automatically every year, regardless of any changes, up or down, in the value of the home. Those annual increases can be used to pay the premium on long term care insurance, leaving other asset intact as well as providing for care. Thus family can enjoy the remaining years, instead of that time becoming a burden for all.
There are many ways to prepare for the eventuality of needing care at some point in our lives. While some limited last-minute help may be possible, preparing can prevent long term care impoverishment and provide flexibility of care options. Why not find out what can be done in your situation? Call Romeo Raabe at (902) 884-3030 or (800) 219-9203 and learn what you can do.
For Medicaid to Pay For Your LTC You Must Cash In Your Life Insurance & Go Broke
I was at a health fair yesterday, and was amazed at the level of optimism displayed. One woman came by my table using a walker and said she had no need for LTC insurance as she was still healthy. Another said she did not need care, yet, but would call me when she did.
It’s great to be an optimist. It’s also good to plan ahead, but not everyone does. In fact, those that do may be in the minority. Thus I have strategies to help them when it’s too late for insurance.
Several people approached me with stories of relatives who were entering a LTC facility soon. They asked what I could do for them. In many cases their assets are minimal so there is not a lot to work with. To qualify for Medicaid they will spend all assets down to $2000 and cash in life insurance if the amount payable at death is over $1500. When they die the state will recover from their $2000 of assets leaving virtually nothing to pay for their funeral (the $1500 of life insurance – if they have that – will not get them down below the frost line in Wisconsin).
Thus, in many cases the only thing I can do to help is to set up an irrevocable burial trust. Medicaid allows this up to $15,000 and it is not considered a divestment for Medicaid eligibility. If they have this much or more in savings, they can rest assured that their children will not be left with their funeral bill. If they do not do this, it is very likely their children will be paying for the funeral. The ADRC (Aging and Disability Resource Center) people at this health fair said this bill commonly falls to the children when people did not plan ahead.
If the person needing care has more funds than this, they can also set up irrevocable burial trusts for their children and the spouses of their children. This is also not subject to the look-back and is not considered a divestment. Thus with 3 children, all married, one can move $90,000 to family and still qualify for Medicaid.
There is also a way to convert a sum of money into an income for life. This is called an annuity and is a stream of income you cannot outlive. Obviously the older you are, and the less life expectancy you have left, the larger the monthly income it can produce from the sum you have available.
One annuity company will take health into consideration. This means that if your health is worse than the “average” person of your chronological age, you can receive a significantly larger monthly income than a healthy person would from the same sum. This becomes a LTC solution for those who did not plan ahead.
If you have a sum that will be spent down paying for LTC, leaving nothing behind for family, and could instead take just a portion and produce the needed income to pay for your care, wouldn’t that be a wonderful thing? You can pay for your care, not have to spend down to Medicaid impoverishment, and leave funds for family too.
If you know someone facing a LTC situation, suggest they call Romeo Raabe, TheLongTermCareGuy.com at (920) 884-3030 or (800) 219-9203 for help.
You Need LTC, But Did Not Buy Insurance – What Can Be Done?
You thought (hoped, actually) that you would never need Long Term Care. If it did happen you figured perhaps your family would take care of you. Neither of those thoughts panned out and now you are facing a very expensive long term bill. What can you do?
Fortunately, there are strategies that can help in this situation. If you have a significant nest egg and are earning a good rate of interest on those investments, perhaps the interest and current income will cover the cost. Bear in mind that when care is needed, there may be less need for multiple vehicles, toys, entertainment, trips to Branson, etc.
If this is not your situation then perhaps there might be a way to make the funds you do have last longer or for life. One way to do this is with a medically underwritten immediate annuity. Typically, when a life income annuity is purchased, a large sum is exchanged for a monthly check that will come until the day you die. The older you are, the less years the annuity company predicts they will be making those payments and the larger the monthly check you receive from a fixed sum submitted. Thus older people (and men due to shorter life expectancies) receive a significantly larger payout from the same sum than a younger person (or female) would.
One annuity company takes health into consideration in their calculations. If you need Long Term Care, you are probably not as healthy as the “average: person of your chronological age. You probably have a much shorter life expectancy as well. By underwriting for health – taking a shorter life expectancy into consideration – this can be a solution to help you pay for Long Term Care and never run out of money. If you have $300,000 of non-qualified assets, and for about half of that I can get you the needed cash flow to pay for your Long Term Care needs for life, then the remainder is left for family. If your needs increase, and an expensive nursing home is necessary, you will be older and in worse health, making a second life income even less expensive than the initial one.
If you have no liquid, non-qualified funds for this strategy, but own a house, then a reverse mortgage may be used to produce the cash for this strategy. Imagine withdrawing cash from “bank of house” and converting those funds into a life income that keeps you at home instead of spending down, selling the home, and ending up on Medicaid in a nursing home.
If you own a life insurance policy, even a term policy, it is possible to sell it on the secondary market and receive a significant cash sum that can also be used to fund your Long Term Care.
If you are spending down to Medicaid impoverishment it is still possible to protect some of your funds. While Medicaid requires life insurance policies over about $1500 of death benefit to be cashed in, you can set aside up to $15,000 (varies by state) in an irrevocable burial trust. This money is not considered a divestment by Medicaid, and is immediately available at death (wire transfer) to pay for final expenses. Life insurance policies can take several weeks to collect on and often the funeral home requires a several thousand dollar deposit on somebody’s credit card. Family is in control and spends as much or as little as desired with the remainder being refunded to the estate of the deceased.
In many locales it is also possible for a parent to fund irrevocable burial trusts for children and spouses of – and still not be a divestment for Medicaid purposes. This can be done while in a Long Term Care facility, it is not too late until the money is all gone.
If you are an agent with elderly clients who may need such advice or assistance or are a consumer looking for solutions to a difficult situation, call me, Romeo Raabe TheLongTermCareGuy.com at (902) 884-3030 or (800) 219-9203 and lets see what can be done.
Are You Concerned About How You Will Pay For Long Term Nursing Care?
You’ve read that nursing homes can cost up to $8500 a month, assisted living half of that, and home care anywhere from very little to more than the nursing home. Your first thought might be there is no way I can afford such care. That is often an accurate first impression. However, there are strategies that can help.
First, consider how much of the cost you may be able to bear on your own. When someone needs care, lifestyle changes, often considerably. If one of a couple needs care there may be no need for a second car or pickup truck. That can equate to less mouths to feed. Then there are the toys; boat, motorcycle, snowmobile, camper, etc.
The travel and fun budget will also shrink with no trip to Branson, a cruise, a bed and breakfast weekend, etc. Note: you should be having fun while you are healthy as you only go around once in this life. Thus with basic necessities budgeted for, less gasoline, insurance, tires, trips, toys, etc., you may find that a significant amount of income may be freed up.
Long Term Care insurance is a great way to pay for care, if you purchase it while still healthy enough to get it. The trick is to investigate it when it becomes affordable, and take into account the budget changes mentioned above and not buy too much. Most long term care is NOT done in nursing homes, so an amount that, along with available income, can cover home care or an assisted living facility may be sufficient for many. And don’t forget the IRA or other nest eggs. Even if you want to preserve them for a spouse or heirs, you can still use the income (yield) they produce. I realize interest rates are not the highest right now, but every little bit helps.
Medicare does not pay for long term care. It will pay for a short recovery stay in a skilled nursing facility following 3 days in the hospital (and you know how quickly they get you out), but that is only for your active recovery for a very short time. Medicaid can pay for care, but only after you are impoverished, meaning you have spent all available assets, cash, savings, real estate, etc. It is a last resort to be avoided if possible. If this becomes necessary, do plan to set aside some money in an irrevocable trust to pay for funeral, which most states allow (life insurance must be cashed in to get Medicaid).
There is a strategy that uses as its base an annuity, an insurance product that converts a sum of money into a monthly income for life. Obviously the older you are, the smaller a check you write to receive the needed monthly check for life in return. One company has fine tuned this for long term nursing care, however, and takes health into consideration. If you need care, your health is probably not as good as the average person of your chronological age. Thus your shorter life expectancy, when taken into account, means a smaller sum may buy you the income you require for the rest of your life. The worse your health, the better the deal.
If funds are not available in your regular bank, do not discount the “bank of house” (reverse mortgage). Since you can’t take it with you, why not use its equity to help you stay at home in it? Some people have even used home equity through a reverse mortgage to pay for long term care insurance. This gives them a much better chance to remain in the home and have money left over at the end to pass on.
For more information on what is best for your situation, contact TheLongTermCareGuy.com Romeo Raabe at (920) 884-3030 or (800) 219-9203
Seniors Optimistic About Future
Seniors today are optimistic about the future, yet 41% of them that are not yet retired plan to rely on Social Security as their primary source of income. This is probably due to the decimated nest eggs as a result of the past 5 years financial crisis.
41% WOW, that means a lot of people who are ignoring the government’s position that Social Security is not to replace other means of support, but only to augment them. Many of these people have no alternative. Long term unemployment, very low interest rates, capital that has evaporated, etc. leaves them more dependent on that Social Security check than they or the government wanted.
Many of these people will not be able to afford LTC insurance. They will need to pin their hopes on Medicaid, a program for the impoverished. It may not take long to end up impoverished with nursing homes often costing to $8500 a month, and assisted living facilities $3500 to $5000 a month. Home care is expensive too.
LTC insurance is the least expensive way to plan for the possibility of needing assistance when people are no longer able to get along on their own anymore. IF one purchases it while still healthy enough to get it, and benefits are chosen appropriately, the premiums are affordable for many – but not all.
For others there are ways to make the best of the situation, if you know what must be done. Medicaid requires one to spend down, and also to cash in life insurance over $1500 worth of death benefit. However, money can be set aside for burial expenses, if done properly, so that the family does not end up taking a collection among themselves in the funeral home at death.
Medicaid generally allows (varies by state) up to $15,000 to be set aside in an irrevocable trust for burial. This is money not tied to any funeral establishment, and is under control of the family. The money can be used for any funeral associated bills at time of death and is far better than children financing this final bill. Nobody wants to leave that legacy to their family. What ever is not spent on final expenses is refunded to the estate of the deceased of the insured, spend as much or as little of it as needed.
If money is divested (given away) in the 5 years prior to needing Medicaid, there will be a penalty period during which Medicaid funds are not available. The irrevocable burial trust is exempt from these penalties. They can be funded even if the person doing so is already receiving care, or in a facility. It is even possible to set aside $15,000 for each of your children (and spouses of) in an irrevocable burial trust as well, if done before the money is all spent on care.
If this is of interest to you or your clients, contact TheLongTermCareGuy.com at (920) 884-3030 or (800) 219-9203 to get this set up. If you sell Medicare Supplements, you already have the clients who will be needing to do this. If you are a consumer worried about this, remember that the ambulance does not stop at my office on its way to the hospital.
Your Life Insurance Can Help Pay For Your LTC
Lawmakers from several states are encouraging elderly people to use their life insurance to help pay for their Long Term Care through viatical settlements.
Currently, life insurance in an amount over $1500 of death benefit had to be cashed in prior to qualifying for Medicaid. The money received from cash value could be used like any other funds, spent for care, repairs on the house for an “at home” spouse, etc. Typically these were small $5000 life policies with negligible cash value. A term life policy with no cash value was simply dropped at time of Medicaid eligibility.
A viatical settlement, sometimes called a life settlement is when a life insurance policy is sold to an investor. This purchaser pays the premiums due and collects the insurance proceeds at death. If the insurred individual needs LTC services, it follows that death might not be too many years off thus creating a potential profit for the purchaser of the policy.
Even a term life policy with no cash value can be of value if death is not too far off. This gives value where dropping or cancelling the policy gives nothing back to the insurred. Typically a life insurance pllicy needs to be $50,000 or larger to interest any potential purchaser.
With the new regulations being proposed to encourage and regulate this market, the proceeds of life policy sale are placed into an irrevocable bank account and can only be used for the payment of the insurred’s LTC services. This helps the state reduce Medicaid expenses when the person needing LTC can pay longer out of pocket rather than accessing Medicaid sooner.
It also allows the person receiving care to pay for the care he/she wants, in the setting of choice, versus the often required nursing home placement on Medicaid. Thus there is value for all three parties, the purchaser, the insurred, and Medicaid. If the person receiving care is thus able to remain at home or in an assisted living facility longer, those care providers benefit as well.
States are starting to enc ourage and regulate this business as stated in a recent article in the Wall Street Journal. People with life insurance policies above $50,000 may not be aware of this strategy. By allowing them to use an asset they may not know they have, professionals can prolong the care they desire, in the setting they want, for the good of all.
For more information on life settlements, contact Romeo Raabe, TheLongTermCareGuy.com at 920 884-3030 or at 800 219-9203
Mom Is Entering A Nursing Facility, Can We Still Get Her Some LTC Insurance?
It is often a very sudden thing when we realize a loved one needs care in a long term care (LTC) facility. Sometimes it is within hours of a hospital discharge, other times we may have a day or two of advance notice. This can be a very tough thing to do if there has been no advance investigating of available facilities. Some specialize in dementia, others are designed for those who at cognitive and somewhat ambulatory.
Then you learn the cost of facility care. Nursing homes often run $8000 a month in Wisconsin outside of Milwaukee and Madison. Assisted living or CBRF’s may start around $3000 a month but the cost escalates depending on the cares required. If your loved one does not have LTC insurance, the assets may be used up in a very short time.
Once a person requires LTC services it is too late to purchase LTC insurance as they have already met the requirements to be on claim. However, all is not lost. There are alternatives that can help even if care is already being received.
If the loved one or spouse is a veteran, there is a needs based program called Aid and Attendance which may help with some of the costs. Check with your local VA office to see if your loved one qualifies. In addition to this is another government program open to any resident called Medicaid. It is also a needs based program and assets must be “spent-down” to very low levels to qualify. A single person can retain only $2000 of assets including the house, car, IRA, investments, etc. They can keep $45 a month from any income source(s) for income, and must cash in any life insurance they own if the face amount is over $1500. If any money was given away in the past 60 months, a penalty period will be imposed before Medicaid is available.
In many areas, Medicaid means you will be in a nursing home, even if that level of care is not required (this is just one of the reasons to consider LTC insurance while still healthy). At death, the $2000 may go back to the Medicaid program leaving literally nothing available to pay for the funeral. Often adult children pool their available savings to pay for funeral expenses. This can be avoided if the person requiring care has set aside money for funeral expenses in an irrevocable burial trust (IBT).
The IBT can hold up to $15,000, even if that person is already in care and spending down. In addition to their own IBT, the same type of fund can be established for each of the children and the spouses of those children. The IBT (for self or children) does not count as a gift and there is no 5 year look-back or penalty period. If there are 4 married children, an additional $120,000 can be protected for burial expenses in addition to the $15,000 for the person needing care.
There are even more ways to protect funds, or make the money last to pay the bills for LTC. It is best to consult with an expert in this area to learn what you can do. Call Romeo Raabe at (920) 884-3030 or (800) 219-9203 to arrange a meeting and investigate what your options are.
Irrevocable Burial Trusts for Family Members Not a Divestment Court Rules
In a Fond Du Lac courtroom on January 18th, 2013 the court ruled that a person funding irrevocable burial trusts for children and spouses of children is not a divestment for Medicaid purposes.
For years insurance agents have used irrevocable burial trusts instead of final expense life insurance policies as the trusts are outside the estate and not available assets to pay for long term care. Life insurance over $1500 face amount generally must be cashed in to qualify for Medicaid. Medicaid has always allowed these as well as establishing them for children and spouses of, neither of which were considered divestments. A divestment, or gift, would preclude the grantor from receiving Medicaid for long term care.
The recent ruling where Medicaid challenged the practice of establishing trusts for family members clears away any concern that this is a legal and proper estate planning option for people needing or who may need Medicaid.
Here is an example of their use: Mom has Alzheimer’s and needs care in a nursing home. She has $1200 a month income from Social Security and $30,000 in savings plus a home worth $90,000. Her $120,000 of assets will be gone in just over a year and she would rather leave a legacy to her 3 children and their spouses than spend it all at the nursing home. She purchases a $15,000 irrevocable burial trust for herself so that her children will not have to dig into their pockets to pay for her funeral. She then further establishes an irrevocable burial trust for each one of her 3 children and their spouses for $15,000 each. Those for children can only be used for burial spaces and the merchandise of the funeral, not for services. She must obtain a statement of goods and services for each one of them verifying the cost of such merchandise. She has successfully “protected” $105,000 from being spent on her care and when she spends the remaining $13,000 on care, leaving herself with $2000 of assets, she qualifies for Medicaid.
While life insurance payout can take up to 5 weeks afer death, the irreovocable burial trusts can pay out within 48 hours of death, even before the death certificate is issued. This can eliminate the family having to come up with a deposit before the funeral home starts their work.
If you sell final expense life insurance products, you will immediately recognize the benefit to using irrevocable burial trusts instead. If you know of someone spending down to Medicaid impoverishment who would rather leave a legacy for family members, refer them to Kathy Lichter at 920 366-2928 for information on how to offer these products or to obtain them for yourself.